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Sunday, January 11, 2015

RM2bn question mark on 1MDB power deal with Ananda Krishna

After two years, tycoon might get back cash-rich plants sold to govt-backed company
ananda krishnana_1mdb_300Two years ago, billionaire tycoon T. Ananda (“AK”) Krishnan sold his power company Tanjung Energy to 1MDB, the controversial government-owned investment agency which paid through loans. But by the end of the month, as much as 80% of Tanjung Energy might end up back in Ananda Krishnan’s hands, according to the Malaysian Insider quoting the Edge Review weekly.
At the heart of it is a two-part loan totalling RM5.5bn from Maybank and RHB Bank with which 1MDB paid for Tanjung Energy.
The first part, a 10-year deal for RM3.5bn, was backed by cash flows from the company’s 13 power plants in six countries: there was no problem with this loan, the report said.
It was the second part, a two-year loan for RM2bn , which 1MDB has so far failed to pay off, that could see cash-rich Tanjung Energy revert to AK’s ownership through his privately-owned holding company Usaha Tegas Sdn Bhd.
The report said the banks demanded guarantees from Usaha Tegas before granting the loan: in return Usaha Tegas had agreements with 1MDB which, among other provisions, gave Usaha Tegas rights to take some of Tanjung Energy’s assets if 1MDB failed to repay.
The troubled loan makes it awkward for AK as the tycoon’s group enjoys close ties with prime minister Najib Razak’s government, the report says. 1MDB is widely regarded as being Najib’s brainchild.
Repayment of the RM2bn was due in March 2014 but 1MDB obtained several extensions, the last until the end of December, and faces severe pressure from Maybank and RHB, both government-owned. They have given the agency until the end of the month to settle, the report said.
Edge Review’s sources believe as much as 80% of Tanjung Energy’s power assets could end up with Usaha Tegas, should it exercise its rights.
Tanjong generates about RM1 billion a year in earnings, a major source of cash for 1MDB which has borrowings of roughly RM38 billion, the report said.

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